Markup is a term used in marketing to indicate how much the price of a product is above the cost of producing and distributing the product. It can be expressed as a fixed amount or as a percentage. There are numerous variations of each.

As a Fixed Amount

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assume:
retail list price = $1.99 and the product cost is $1.40
MARKUP = price - cost
                  1.99 - 1.40 = .59

assume the actual selling price was $1.60
MARKDOWN = List price - selling price
                          1.99 - 1.60 = .39

INITIAL MARKUP = list price - cost
                                 1.99 - 1.40 = .59

MAINTAINED MARKUP = sale price - cost
                                         1.60 -1.40 = .20

As a Percentage

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Algebra:
Markup $=\; x\backslash \%\; =\; (x\; /\; 100)\; =\; .x$
example: $15\backslash \%\; =\; (15\; /\; 100)\; =\; .15$
$(Original\; *\; Markup)\; +\; Original\; =\; Total$

Using the distributive property of elementary algebra:
$Original\; *\; (Markup\; +\; 1)\; =\; Total$

Solved for Markup:
$(Total\; /\; Original)\; -\; 1\; =\; Markup$

Solved for Original:
$Total\; /\; (Markup\; +\; 1)\; =\; Original$

Markup is the decimal representation of the markup percentage.
Original is the original amount/price.
Total is the marked up amount/price.

Specific:
INITIAL MARKUP % = initial markup / sale price
                                    .59 / 1.99 = 29%

MAINTAINED MARKUP % = maintained markup / sale price
                                              .20 / 1.60 = 13%

MARKUP % ON COST = markup / cost
                                        .59 / 1.40 = 42%

MARKUP % ON PRICE = markup / price
                                          .59 / 1.99 = 29%

To convert from markup on price to markup on cost:
MARKUP ON COST = markup % on price / 1 - markup % on price
                                    .29 / (1 - .29) = 42%

To convert from markup on cost to markup on price:
MARKUP ON PRICE = markup % on cost / 1 + markup % on cost
                                    .42 / (1 + .42 ) = .29

PRICE = cost / 1 - markup % on price
              1.40 / (1 - .29) = 1.99

COST = price / 1 + markup % on cost
              1.99 / (1 + .42) = 1.40

PRICE = markup / markup % on price
              .59 / .29 = 1.99

Some Customary Markup Percentages for Retail Businesses

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Using the formula (price - cost) / price

• New cars 15%
• Used cars 75%
• Electrical Appliances 30%
• Clothing 50%
• Trend Clothing 59%
• Crystal Ware 60%
• Gifts and clocks 55%
• Food Retailers 45%

See also : marketing, pricing, cost-plus pricing, production, costs, and pricing

Pricing | Marketing